Pennsylvania's pension crisis requires action now

Gov. Tom Corbett is trying to get some traction to avoid a looming fiscal crisis in Pennsylvania. Unfortunately, his solution could wind up exacerbating the problem.

The only thing that is clear is that this state can no longer dodge what Corbett refers to as the “tapeworm” in the state budget — $47 billion in unfunded liability in its two large public employee pension plans.

Corbett is right to put a spotlight on this issue. Whether his plan will fix the problem or make things even worse is debatable. What is not is that this can’t be put off any longer.

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And yes, that means the state should not waste another minute debating the privatization of alcohol sales while this ticking time bomb continues to threaten the state economy.

Corbett wants to get all future employees out of the costly current defined-benefit plans and into defined-contribution plans such as 401(k)s that so many of the private sector use. No one is arguing that. But the governor also is looking to reduce the state contributions over the next several years. That seems to ignore the fact that it was the governor’s office — albeit not his — and the Legislature and their decision to increase benefits that caused this problem in the first place.

We would suggest rolling back the pension multiplier to where it was, something not likely to happen since it’s the Legislature that would have to vote on cutting their own pensions.

Besides the state Legislature, also standing in the way are public employee and teacher unions, and courts who, respectively, are reluctant to take action, prepared to fight and expected to declare illegal some of the pension reform Corbett is proposing.

Corbett and some allied lawmakers recently seized the bully pulpit to spark movement on the public pension issue that mostly has been dead in the water since February.

The governor has been trying for months to get the public fired up about the risks the $47 billion pension liability places on state and local government as well as school district finances.

He’s solicited media support to help educate the public on the issue and made pension reform a centerpiece in his budget proposal presented in February.

His proposal would reduce state contributions to the pensions system, coupled with benefit changes for current and future employees. Benefits already earned by public employees would not be affected, and those already retired or who retire before 2015 would see no change in benefits.

The proposal was met with a call to arms by public employee unions, which vowed that changes in their plans would be overturned by the courts.

After the initial burst of anger, the atmosphere around pension reform has been so quiet one would think it was dead.

At stake is more than just long-range projections. Corbett pegged his 2013-14 budget plan on saving $175 million in a pension overhaul.

Corbett has said that the current liability amounts to a $9,000 bill for each household in Pennsylvania. On its current course, the liability will top $65 billion by 2018, bringing the per household total to more than $13,000, he said.

Senate Majority Leader Dominic Pileggi, R-9th of Chester, recently indicated there was some division in the ranks over changing benefits, even if those changes would affect only benefits earned in the future.

So where is the solution?

Public employee unions threaten legal action if their benefits are touched, and legislators say future reforms won’t address the current liability.

As the stalemate continues, the clock ticks closer to the June 30 budget deadline with no resolution or reform in sight.

The only certainty is that Pennsylvania’s pension liability is looming and getting larger by the day.